INVESTMENT CASE

Over 75%
of turnover is
non-cyclical
R2.7 billion
returned to shareholders
since
2005

Clicks Group offers a sustainable investment proposition for investors seeking non-cyclical equity exposure to the retail and healthcare sectors in South Africa.

Market positioning and business model

  • Positioning as a health and beauty retail and supply specialist is unique in South Africa
  • Over 75% of group turnover is non-cyclical
  • As a value retailer Clicks is highly price competitive
  • Predominantly cash-based retailer
  • Organic growth complemented by tactical acquisitions to accelerate growth in new markets

Market leadership

  • Group occupies market-leading positions in all businesses
  • Clicks independently rated as SA’s first choice for health and beauty
  • First mover advantage in corporate pharmacy market
  • UPD is the country’s only national full-range pharmaceutical wholesaler
  • Musica is the leading music and entertainment retailer in SA

Customer offering

  • National retail coverage through more than 560 stores
  • Largest retail pharmacy network with 251 in-store dispensaries
  • Pharmacy network complemented by direct-to-patient courier pharmacy service
  • Clicks ClubCard largest loyalty programme in the country with 3.1 million active members
  • Over 74% of Clicks sales generated through the Clicks ClubCard

Financial performance and wealth creation

  • ROE more than trebled over past five years from 14.2% to 50.8%
  • Diluted headline earnings per share: 29.8% five-year compound growth
  • Distributions per share: 29.0% five-year compound growth
  • Shareholder wealth of R8 billion created since 2005
  • Culture of investing for growth: capital expenditure of R1 billion in past five years
  • Active capital management programme enhancing earnings
  • Over R2.7 billion returned to shareholders in past five years
  • Highly cash-generative business

Organic growth prospects

  • Clicks to expand store base to 500 in the medium term
  • Objective to operate a pharmacy and clinic in every Clicks store – opportunity to double current base of 251 pharmacies
  • Clicks has 13.6% retail pharmacy market share – goal is to grow to 30% in the medium term
  • Corporate pharmacy is only six years old in SA and already accounts for 25% of market. This is anticipated to double in the longer term in line with corporate pharmacy markets in other developed economies
  • Dispensaries take at least three years to reach maturity – 39% of Clicks dispensaries have been operating for less than two years
  • UPD to benefit from growth in Clicks Pharmacy, Clicks Direct Medicines and increasing loyalty from Link pharmacy network
  • UPD positioned to grow third party agency distribution contracts
  • Clicks private label and exclusive brands offer differentiated product at higher margins, targeting to grow to 25% of sales from current 17.8%